Microsoft Stores Flounder as Apple Unleashes 2.0 Stores

Apple (APPL) unveiled Apple Store 2.0 this week with cool, iPad-based kiosks and smoother service for its many customers. Meanwhile, rival Microsoft (MSFT) is struggling to get people into its eleven Microsoft stores. There are more than 300 Apple stores worldwide, but Microsoft can still make an impact with smarter location planning, a clearer mission statement, and store-exclusive products.

Out of eleven stores, four of them are in Southern California. Living in Silicon Valley, I'm utterly baffled as to why there isn't a Microsoft store within my area.

Worse, Microsoft has zero East Coast presence. Boston/Cambridge, the home of MIT, or even Washington DC, the location of our (likely) Windows-based government, would be great locations for its stores. Even the south is barely represented with Atlanta, ignoring tech-heavy Austin for Houston. It's like Microsoft CEO Steve Ballmer threw eleven darts at a U.S. map.

Apple stores have already penetrated all the major areas within America, but Microsoft can still establish itself in areas where techies still appreciate their products.

Internal conflict
According to Business Insider, both Ballmer and COO Kevin Turner want to aggressively expand the number of stores, eventually to eclipse Apple's 300-plus outlets. The shareholders have a more conservative viewpoint:

The reason: the stores are expensive to build -- Microsoft wants them to be high-profile showcases like Apple stores are -- and most of them aren't making money.

How can Ballmer sell the idea of more stores when the formula isn't even working on a small scale? He can't. The best thing he can do is get more customers in the stores it already has. Microsoft needs to offer unique products.

No unique products
The last issue: Why go to a Microsoft store? Every product in the store is available at Best Buy, Comp USA, and nearly all big box tech stores. In comparison, Apple has its limited authorized dealers and didn't allow other retail stores to carry its hottest products, like the iPad, until it had already established its Apple stores.

Microsoft, of course, can't be the exclusive seller of Microsoft products, but it can offer exclusive products and/or discounts. For instance, with its new billion-dollar deal with Nokia, Microsoft could make the next Windows Mobile 7 phone available exclusively at its stores for the first week.

Microsoft stores have gotten solid reviews so far. The only thing Microsoft needs to do is add more stores -- and actually get people to come for the first time.